Administrative Law - Judicial review - Procedure and evidence - Costs - Discretion - Anti-Discrimination Tribunal - Irrelevant considerations - Imbalance between the resources of the parties.

Anti-Discrimination Act 1998 (Tas), ss95, 99(2), 99A.

Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) [2006] NSWCA 292; (2006) 68 NSWLR 177; Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311; Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497; Vero Insurance Ltd v Gombac Group Pty Ltd [2007] BSC117; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Donald Campbell & Co v Pollak [1927] AC 732; Cretazzo v Lombardi (1975) 13 SASR 4; Scherer v Counting Instruments Ltd [1986] 1 WLR 615; Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450; Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975; Physical Disability Council of NSW v Sydney City Council [1999] FCA 815; Microsoft Corp & Anor v Marks [1996] FCA 767; South Melbourne City Council v Hallam (No 2) (1994) 83 LGERA 307, referred to.

Anti-Discrimination Tribunal: Notice of Submission filed

Anti-Discrimination Tribunal: Henry Wherrett & Benjamin

Judgment Number: [2008] TASSC 23

THE STATE OF TASMANIA v ANTI-DISCRIMINATION TRIBUNAL

1 On 27 July 2004, Anthony Ross Hadfield lodged a claim form with the Anti-Discrimination Commissioner ("the Commissioner") alleging that he and his children had been discriminated against by the Child and Family Services Division of the Department of Health and Human Services. The Commissioner accepted the complaint and referred it to the Anti-Discrimination Tribunal ("the Tribunal") constituted under the Anti-Discrimination Act 1998 ("the Act"), s12.

2 At the Tribunal's initial directions hearing on 11 October 2005, the orders it made included orders that within three weeks Mr Hadfield provide the Tribunal and counsel for the State with: a list of the documents on which he intended to rely; a list of the witnesses he intended to call; a statement of the orders he sought; and a statement of agreed facts. Mr Hadfield did not comply with these and similar orders for over a year, notwithstanding some six follow-up hearings before the Tribunal. On 9 January 2007, counsel for the State wrote to the Tribunal and Mr Hadfield advising that on account of Mr Hadfield's repeated and continuing non-compliance with the Tribunal's directions, the State would apply for the dismissal of his complaint pursuant to the Act, s99(2). That subsection is as follows:

"99 (1) ...

(2) The Tribunal may dismiss a complaint at any time if it is satisfied that -

(a) the complaint is trivial, vexatious, misconceived or lacking in substance; or

(b) dismissing the complaint would, for some other reason, be just and appropriate."

3 The State's foreshadowed application for the dismissal of the complaint was deferred at hearings before the Tribunal on 1 February 2007 and 1 March 2007, pending the outcome of an application Mr Hadfield had made for legal aid. That application was not successful, and on 17 April 2007, the Tribunal made orders that within three weeks Mr Hadfield provide a final list of the documents upon which he intended to rely, together with witness statements of six witnesses that he had indicated he intended to call. During the course of this hearing, the Tribunal went to considerable lengths to explain to Mr Hadfield that if he failed to comply with its orders, his complaint would almost certainly be dismissed.

4 By letter dated 16 May 2007, the Tribunal wrote to Mr Hadfield, noting that he had not complied with the orders it had made on 17 April 2007 and advising that in view of his non-compliance, the Tribunal would hear submissions from the parties on counsel for the State's application for the dismissal of the complaint. In the course of the hearing that then ensued, counsel for the State applied for the dismissal of the complaint and sought an order that Mr Hadfield pay the State's costs. After reserving its decision, the Tribunal ordered the dismissal of the complaint but rejected the State's application for costs. In the course of announcing its reasons for so doing, the Tribunal expressed satisfaction that both of the alternative limbs to the Act, s99(2), had been made out, that is, the complaint was misconceived and lacking in substance, and that it was just and appropriate that it be dismissed because of Mr Hadfield's repeated and prolonged non-compliance with the Tribunal's directions.

5 In relation to costs, the Act provides:

"95 Subject to section 99A, each party to an inquiry is to pay his or her own costs.

...

99A The Tribunal may make an order as to costs in relation to any inquiry or review before it if the Tribunal considers circumstances justify the order."

6 The relevant portion the Tribunal's reasons for rejecting the State's application for costs is as follows:

"It must be remembered that whilst there is a power to make a costs order under the Act the starting premise in this jurisdiction is that usually there would be no order for costs, and this is clear from the terms of section 95 which states 'subject to section 99A each party to an Inquiry is to pay his or her own costs'.

Case law interpretation supports this view and I refer in particular to the Tribunal decision in Buchanan v Lindisfarne RSL [2004] TASADT 2 which adopted the High Court reasoning in Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311, which related to the Family Law Act costs provision but similar principles, and also in a decision under the New South Wales Anti-Discrimination Act Sloey v State Transit [1999] NSWADT 40, which made reference to legislative direction in respect of the usual practice of parties paying their own costs and which the Court interpreted as creating presumption which a party contending for costs must rebut that each party to pay their own costs.

In this and the Penfold case the provisions were further interpreted as requiring analysis of the relevant circumstances that determine whether there are justifying circumstances for a costs order to be made. Although they did note that it shouldn't be placed at such a high threshold that there be a requirement of exceptional circumstances. Further guidance on the making of costs orders can be gleaned from the case of K v Office of the Director of Public Prosecutions and Bugg [2004] TASADT 1.

Drawing from the cases of Sloey v State Transit and also another Tribunal decision Koppleman v Moore [2001] TASADT 2 a number of factors relevant to the consideration of whether a costs order should be made were discussed including whether there is an imbalance between the parties and whether or not the proceedings can be characterised as malicious. With regard to the former as in the K v Office of the Director of Public Prosecutions and Bugg matter the Tribunal is satisfied that there is an imbalance at least of resources between the parties in that the Respondent's resources are greater as reflected in Mr Hadfield's lack of legal representation. With regard to the latter point and whether proceedings can be characterised as malicious there is no evidence on which the Tribunal could reasonably be satisfied that the conduct of Mr Hadfield has been of this character.

In practice as I'm sure parties would be aware costs orders have been made very rarely in this jurisdiction. And although from the Respondent and Respondent's Counsel's point of view, as indeed for the Tribunal, the matter has been protracted and frustrating to be involved in given the lack of progress. The Tribunal takes the view that it lacks the features which would justify the making of a costs order.

While Mr Hadfield's initiation and (inaudible) of the complaint has been misguided and frankly completely ineffective there is nothing to suggest that he has deliberately acted in bad faith. Indeed, the Tribunal accepts that he has been motivated out of concern for his children and his desire to be reunited with them. In these circumstances the presumption that each party should bear their own costs has not been rebutted."

7 One factor that the Tribunal identified as being relevant to its consideration of whether a costs order should be made was whether there was an imbalance between the parties, and as to such an imbalance, it concluded that there was an imbalance, at least of resources between the parties, in that the State's resources were greater as reflected by Mr Hadfield's lack of legal representation. Insofar as the Tribunal relied upon this imbalance, it is contended on behalf of the State that the Tribunal took into account an irrelevant consideration. Relying on the Judicial Review Act 2000, ss17(2)(e) and 20(a), the State submits that the Tribunal's order should be set aside and the question of costs should be remitted to the Tribunal for determination according to law.

8 As to the varying forms of statutory power to award costs, the following passage from Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) [2006] NSWCA 292; (2006) 68 NSWLR 177 is informative. Basten JA, agreed with by Santow and Bryson JJA, said at pars14 - 25:

"The power to award costs in the Land and Environment Court is to be found in s 69(2) of the Land and Environment Court Act, which provides:

'69 ...

(2) Subject to the rules and subject to any other Act:

(b) the Court may determine by whom and to what extent costs are to be paid ...

No other Act is relevant, but Part 16 of the Land and Environment Court Rules 1996 makes express provision in relation to certain categories of proceedings in Classes 1, 2 and 3 of the Court's jurisdiction, which include the present proceedings: r 4(1)(a). Rule 4(2) reads:

'4 ...

(2) No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable.'

The historical development of powers to award costs, both in equity and by statute, has been reviewed in a number of cases and need not be repeated: see, eg, Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; Knight v F P Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178 and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. It is sufficient to note in the present case that the power is statutory and discretionary.

Statutory powers to award costs may be found in one of three forms. The first is an unconstrained conferral of power without direction or limitation. Absent the relevant rule, the power conferred by s 69(2) is such a power. As was explained by Gaudron and Gummow JJ in Oshlack, adapting the words of Dixon J in Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21; (1947) 74 CLR 492 at 505, the power is 'unconfined except in so far as "the subject matter and the scope and purpose" of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be "definitely extraneous to any objects the legislature could have had in view"': [1998] HCA 11; 193 CLR 72 at [22].

As identified in Latoudis v Casey, the primary and generally the only relevant consideration is that the power is conferred 'to compensate the successful party against the expense to which that party has been put by reason of the legal proceedings': Oshlack at [25]; see also Ruddock v Vadarlis [2001] FCA 1865; (2001) 188 ALR 143 at [12] (Black CJ and French J).

The second category of cases covers those which expressly identify the principle that the power to award costs is intended to permit the successful party to be compensated or indemnified for costs incurred in the litigation, by providing that 'the court is to order that the costs follow the event unless it appears to the court that some other order should be made': Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

The third category of cases encompasses those, like Part 16, r 4(2), which provide as a general rule that there shall be no order as to costs, with a discretionary power to depart from that rule in particular circumstances, including where the court considers that it is fair and reasonable.

No doubt there are a range of variations to be found within this basic structure. Thus, within the third category, the Workplace Relations Act 1996 (Cth) contains in s 824 a prohibition on ordering one party to pay another party's costs, unless the first party 'instituted the proceeding vexatiously or without reasonable cause' or 'by an unreasonable act or omission' caused the other party to incur costs in connection with the proceedings. The history of predecessors to that provision may be found in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 (Northrop J). Another variation may be found in s 85A of the Native Title Act 1993 (Cth).

Provisions closer in terms to Part 16, r 4 may be found, for example, in the Family Law Act 1975 (Cth) s 117, which, as enacted, read:

'117 (1) Subject to subsection (2) and section 118, each party to proceedings under this Act shall bear his own costs.

(2) If the court is of opinion in a particular case that there are circumstances that justify it in doing so, the court may ... make such orders as to costs ... as the court thinks just.'

(A series of factors to be taken into account were specified in regulations. They are now contained in s 117(2A).) In relation to s 117, the High Court held in Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311 at 315:

'It is an accurate description of s 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s 117(2). As sub-s (1) is expressed to be subject to sub-s (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, ... we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117(2) in "a clear case".'

Another similar provision was contained in the Anti-Discrimination Act 1977 (NSW), s 114, at a time when hearings under that Act occurred in the Equal Opportunity Tribunal. In Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497 this Court (Kirby P, Samuels and McHugh JJA agreeing) declined to make an order for costs in favour of the successful Commission, in relation to the proceedings in the Tribunal. In part that was because the Commission succeeded on a constitutional argument it had not raised before the Tribunal: p 505C. In addition, the Court took into account the fact that the Commission could have bypassed the Tribunal and simply sought an order in the nature of prohibition from this Court.

Limited assistance may be obtained from decisions in relation to other statutory regimes, for three reasons. First, differences in emphasis may flow from differences in language. Thus, both the Family Law Act and the Anti-Discrimination Act made the general rule subject to the discretionary power to award costs. That is not the language of Part 16, r 4(2).

Secondly, the reason for constraining a discretionary power in a particular way will need to be assessed in the specific statutory context and by reference to the possible reasons for departing from the specified general rule.

Thirdly, care must be taken to avoid broad discretionary powers being inflexibly confined by comments of the Court in previous cases, or by comments in appellate courts. Whilst explanations as to the exercise of the power may provide guidance in future cases, the caution reflected in the observations of Brennan J in Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 537, quoted in Oshlack at [35], are pertinent:

'It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise'."

9 Adapting the passage from Penfold v Penfold quoted by Basten JA to the Act, it is an accurate description of the Act, s95, to say that it expresses a general rule that parties are to pay their own costs, provided that it is firmly understood that this rule is not paramount to the Act, s99A. As s95 is expressed to be subject to s99A, the former must yield whenever the Tribunal finds in a particular case that there are circumstances justifying the making of an order for costs.

10 Prior to 16 November 2004, the Act, s95, was as follows:

"95 (1) Subject to subsection (2), each party to an inquiry is to pay his or her own costs.

(2) The Tribunal may make an order as to costs if it considers circumstances justify the order."

On 16 November 2004, s95 was amended to its present form, and s99A was added to the Act. These and other amendments made to the Act at that time extended the power of the Tribunal to award costs to reviews of rejections and dismissals, and gave the Tribunal the power to require a complainant to pay security for costs. For present purposes the 2004 amendments to the Act are of no significance. Similar provisions to ss95 and 99A are not rare. As can be seen from the above passage from the decision of Basten JA in Hunter Development Brokerage Pty Ltd, similar provisions are in the Family Law Act 1975 (Cth), s117, and were in the Anti-Discrimination Act 1977 (NSW), s114, at the time of the decision in Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497. See also the Victorian Civil and Administrative Tribunal Act 1998 (Vic), s109.

1">11 One aspect of provisions as to costs of the nature in question that warrants attention is that insofar as they provide that in the absence of an order for costs the parties shall bear their own costs, that provision is otiose. It is patently obvious that if there is no order for costs, the parties will have to bear them. It seems that the reason for including this statement of the obvious in provisions of this nature is to distinguish the power as to costs so granted from an unconstrained grant of power, and to indicate that it should not be presupposed that upon the resolution of a proceeding, a cost order will be made or that the outcome of the proceeding will be given the same primacy that it is accorded when exercising an unconstrained discretion as to costs. As to such a provision, in Australian Postal Commission v Deo (No 2) (supra), Kirby P, at 505, agreed with by Samuels and McHugh JJA, described its effect as being that the basic rule was that parties to the proceeding would bear their own costs, save for exceptions where the circumstances justified the making of an order. In Vero Insurance Ltd v Gombac Group Pty Ltd [2007] BSC117, Gillard J dealt with the Victorian Civil and Administrative Tribunal Act 1998 (Vic), s109, which is analogous to the provisions under consideration. At par18, he said of it that it can be seen that the general rule to apply in all proceedings is that each party is to bear their own costs, but that the general rule must yield to a finding by the Tribunal as to costs where it is satisfied that it is fair to do so.

12 Besides the indications already referred to, the only positive indications to be found in the Act of circumstances relevant to the making of an order for costs are:

• the withdrawal of a complaint, s68(4)(c);

• a complainant's failure to attend a directions conference, s80(4)(b);

• the amendment of a complaint, s84(2);

• a respondent having made a written request to the Commissioner about the requirements for the Act in relation to a specific situation, s96(a);

• a respondent having provided the Commissioner with all the material facts, s96(b); and

• a respondent having acted in accordance with written advice provided by the Commissioner in respect of the request, s96(c).

The circumstances covered by the first three of these dot points are self-explanatory and those covered by the last three dot points open the way to relieving a respondent from an order for costs where the respondent has co-operated with, or acted on the advice of, the Commissioner.

13 The formulation, s99A, calls on the Tribunal to address before making an order for costs is whether it "considers circumstances justify the order". In Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125, Spigelman CJ, Mason P, Beasley, Giles and Ipp JJA agreeing, at par51, said of the formulation "fair and reasonable" referable to a power to award costs, that it would be more accurate to describe it as calling for a judgment to be made, rather than a discretion to be exercised, although the evaluative process can be accurately described as conferring a wide discretion. For my part, I am comfortable with the use of the term "discretion" in this context. It has been so used for many years when describing the exercise undertaken when considering an order for costs.

14 In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, Gaudron and Gummow JJ, at par22, said of the Land and Environment Court Act 1979 (NSW), s69(2)(b), which conferred a power to award costs, that:

"The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view: Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21; (1947) 74 CLR 492 at 505'."

15 At the same page in Water Conservation and Irrigation Commission (NSW), Dixon J also said:

"I have before remarked on the impossibility, when an administrative discretion is undefined, of a court's doing more than saying that this or that consideration is extraneous to the power (Swan Hill Corporation v Bradbury [1937] HCA 15; (1937) 56 CLR 746, at pp 757, 758)."

16 Some guidance can be gained from the authorities on considerations that may be extraneous to the exercise of the power to award costs. Before turning to those authorities, I return to the decision of Penfold v Penfold referred to in the passage from the judgment of Basten JA in Hunter Development Brokerage Pty Ltd, set out in par8 above. The legislation that was the subject of Penfold v Penfold specifically identified a number of matters that the court could take into account when determining whether the circumstances of the particular case justified the making of an order for costs. Regulation 173(1) of the then applicable Family Law Regulations provided:

"173 (1) Where a court proposes to make an order for costs under sub-section 117 (2) of the Act, it may, in making the order -

(a) take into account the financial circumstances of the person against whom the order is to be made;

(b) take into account the availability of legal aid;

(c) obtain an assessment of his costs from the party in whose favour the order is to be made or his legal practitioner;

(d) obtain a report from the registrar or other officer of the court as to the proper amount of costs incurred;

(e) consider the conduct of all parties at the hearing and determination of the proceedings, including their conduct in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admission of facts, production of documents and like matters; and

(2) As far as practicable, the court shall fix the amount of the order for costs or security for costs without recourse to the taxing of costs."

It is to be noted that reg173 specified that matters such as the financial circumstances of the parties and the availability of legal assistance were relevant to the consideration of whether an order for costs should be made. On my reading of the authorities, considerations of this nature are ordinarily irrelevant to the exercise of a power to award costs. It may be that these considerations were included in reg173(1) because it was recognised that had they not been so included, they would be irrelevant. (A similar inclusion appears in the Resource Management and Planning Appeal Tribunal Act 1993 (Tas), s28(3)(h), which makes the capacity of the parties to meet an order for costs a relevant consideration.) It may also be that the ultimate source of the proposition that an imbalance in the resources of the parties is relevant to the costs discretion to be exercised by the Tribunal, can be traced back to Penfold v Penfold. If so, that would be an error, as there is no equivalent to reg173 in the Act. Whilst the Tribunal referred to Penfold v Penfold, it was not in this context. The three decisions the Tribunal identified as having referred to an imbalance in the parties' resources as a relevant consideration, do not identify the source for that conclusion or explain it.

17 The authorities include many statements to the effect that the costs discretion must not be exercised on a ground unconnected with the proceeding. As I see it, whilst the parties' conduct in relation to a proceeding may be connected to it, save where a party's personal circumstances bear on that conduct, those circumstances are irrelevant. In Donald Campbell & Co v Pollak [1927] AC 732 at 811, Viscount Cave LC said of the court's power to award costs:

"This discretion, like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case. Thus, if - to put a hypothesis which in our Courts would never in fact be realized - a judge were to refuse to give a party his costs on the ground of some misconduct wholly unconnected with the cause of action or of some prejudice due to his race or religion or (to quote a familiar illustration) to the colour of his hair, then a Court of Appeal might well feel itself compelled to intervene."

18 In Cretazzo v Lombardi (1975) 13 SASR 4, Bray CJ said at 11:

"I think the guiding principle still stands as it left the House of Lords in the famous case of Donald Campbell & Co v Pollack [1927] AC 732, that the general discretion is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation."

19 In Williams v Lewer [1974] 2 NSWLR 91 at 95, Rath J adopted the following passage:

"The discretion is a judicial discretion, and must be exercised on fixed principles, that is according to rules of reason and justice, not according to private opinion: (Sharpe v Wakefield (1891) AC 173; or even benevolence (Kierson v Joseph L Thompson & Sons Ltd (1913) 1 KB 587), or sympathy (Bevington v Perks (1925) 2 KB 231)."

20 In Scherer v Counting Instruments Ltd [1986] 1 WLR 615 at 621, Buckley, Bridge and Cumming-Bruce LJJ said of the discretion as to costs:

"This discretion is not one to be exercised arbitrarily; it must be exercised judicially, that is to say, in accordance with established principles and in relation to the facts of the case. The discretion cannot be well exercised unless there are relevant grounds for its exercise, for its exercise without grounds cannot be a proper exercise of the judge's function. The grounds must be connected with the case. This may extend to any matter relating to the litigation and the parties' conduct in it, and also to the circumstances leading to the litigation, but no further."

21 As a party's impecuniosity is ordinarily not a circumstance connected to a proceeding, a party's inability to meet an order for costs does not protect a party against an order to pay costs. In Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450, Beaumont and French JJ (Finkelstein J disagreeing) said, at par4, as to the unsuccessful appellants' contention that they should not be ordered to pay costs:

"The first ground relied upon relates to the financial position of the appellants. The appellants are litigants in person. They are impecunious. They rely on social security benefits. They are not able to satisfy any costs order made against them. However sympathetic one may personally be to arguments of this kind, inability to meet a costs order or the fact that the losing party has limited financial means has never been a sufficient reason to deny a successful party his costs."

In Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975, Heerey, Whitlam and North JJ said with reference to the unsuccessful appellants' submission that there should be no order for costs as they had limited financial means and the enforcement of a costs order would have devastating consequences including bankruptcy:

"... the fact that the losing party has very limited financial means is not relevant, any more than it would be in the case of a creditor seeking judgment for a debt otherwise undisputed."

See also Yilan v Minister for Immigration and Multicultural Affairs [1999] FCA 1212, French, Nicholson and Finkelstein JJ at par5; Minister for Immigration & Multicultural Affairs v Zamora [1998] FCA 1170, where Black CJ, Branson and Finkelstein JJ made an order for costs against the respondent, notwithstanding that it was accepted that the respondent was impecunious; and Selliah v Minister for Immigration & Multicultural Affairs [1998] FCA 469, Nicholson J.

22 Again, as the comparative capacity of the parties to meet the costs of litigation is not a circumstance connected to a proceeding, it is not a relevant consideration to the exercise of the costs discretion. In Physical Disability Council of NSW v Sydney City Council [1999] FCA 815, Madgwick J said, in rejecting an argument that he should take into account the parties' unequal capacity to meet the costs:

"It was also contended before me on behalf of the applicant that the respondent City Council, having a large revenue base, as the local government council for Australia's largest city, had a much better capacity to absorb the cost of litigation than the applicant which is a voluntary organisation of modest means, having as members under 200 individuals and approximately 50 physical disabilities organisations and various governmental, semi-governmental and non-governmental agencies, including the New South Wales Council of Social Services. The organisations are all charitable, all concerned with important and worthy objectives, and all respectable ones. The principal source of funding of the applicant is a State government grant and its resources are quite modest. It is said that if, at the end of the day, costs must be met from the public purse, that compartment of that purse which is better stuffed, should be the compartment from which the costs come.

This is little more than an appeal to comparative capacity to pay. However sympathetic one may personally be to arguments of this kind the legal position is clear that, except in extraordinary cases, regard is not to be had to such capacity. It is a matter for political decision whether unequal capacity to engage in litigation is to be assuaged by legal aid and if so, to what extent. There is nothing sufficiently extraordinary about the circumstance of this case to enable me to take into account the parties unequal capacities to pay."

23 In Microsoft Corp & Anor v Marks [1996] FCA 767, no order for costs was made in favour of Mr Marks, the respondent to an unsuccessful appeal, as he had failed on a submission that the appeal was incompetent. With reference to that refusal and a contention that the appellant should pay Mr Marks' costs as his counsel had represented him on the appeal pro bono on a contingency basis, that is, on the basis that counsel would only be paid if Microsoft was ordered to pay Mr Marks' costs, Lindgren J, agreed with by Beaumont and Lehane JJ, said:

"However, it lies in the hands of Government, not of the courts, to address the problem of impecunious litigants. The present case illustrates but one aspect of the inability of a court to redress the imbalance. Acceptance of Mr Marks' submission would involve the making of a special costs order favourable to him and unfavourable to Microsoft which would not have been made if Mr Marks had been paying for his legal representation. It would be wrong that a litigant in the position of Microsoft should have to sustain a forensic disadvantage by reason of a special costs arrangement between the opposing party and the legal practitioners appearing for him. I could not support such discrimination against the opponents of impecunious litigants. It is not amiss to notice that once introduced, the discrimination would apply, not only against corporations such as Microsoft, but also against individuals who, perhaps with difficulty and by borrowing, find the resources with which to pay for legal representation."

24 In the same vein are authorities to the effect that the status or standing of a party is not relevant to the costs discretion, a position that is consistent with the basic principle that all are equal before the law. In Hollier v Australian Maritime Safety Authority (No 2) (supra), Heerey, Whitlam and North JJ in substance said that the status of the successful respondents as public bodies of one sort or another was not a basis for denying them the costs of the appeal. In South Melbourne City Council v Hallam (No 2) (1994) 83 LGERA 307, Tadgell J, agreed with by Ormiston and Coldrey JJ, said at 311:

"The Court of Appeal in Re Southbourne Sheet Metal Co Ltd ([1993] 1 WLR 244) was concerned to check a notion that the Crown should not expect to bring litigation against an individual without risk of paying costs if it should fail. The approach is, in my view, of equal application to litigation brought against the Crown, or an agency of the Crown, by an individual or an authority. A failure by the courts to take a stand which preserves an even-handedness so that (in the absence of special circumstances) a successful party has a reasonable expectation of receiving an award for costs would tend to mischief. This approach is at least as valid in litigation to which the government or its agencies are parties as in cases between citizens. Fair legal challenge to bureaucratic or other government regulation of society should not be deterred by a reluctance on the part of the courts to award a reasonable costs indemnity if the challenge succeeds. That is a premise on which these reasons began. Concomitantly, those who make an unsuccessful challenge must ordinarily expect to give a reasonable costs indemnity to the other side. A principle which recognises this is necessary both to discourage indiscriminate challenges and as a justification for an award of costs to challengers who succeed: cf Professor Enid Campbell, 'Award of Costs on Applications for Judicial Review' [1983] SydLawRw 3; (1982) 10 Syd L R 20 especially at 36 - 38."

25 For present purposes, what I distil from the authorities is that ordinarily circumstances personal to the parties, and an imbalance between the capacities and the resources of the parties, are not relevant to the exercise of the costs discretion. This is not to say that they could never be relevant. For example, a party's failure in relation to an aspect of the conduct of a proceeding could be explained on the basis of a circumstance personal to that party. However, in the decision that is the subject of this review, the Tribunal did not relate the imbalance between the parties' resources upon which it relied, to any relevant matter. It proceeded on the basis that ipso facto an imbalance between the resources of the parties was relevant. Accordingly the Tribunal's rejection of the State's application for costs was an improper exercise of the power conferred on it by the Act, s99A, insofar as it took into account an irrelevant consideration: the Judicial Review Act, ss17(2)(e) and 20(a)).

26 The order made by the Tribunal as to costs is set aside and it is ordered that the matter be referred back to the Tribunal for determination according to law.